Vietnam Becomes Official BRICS Partner, Strengthening Global South Cooperation

Economic

Summary:

On June 13, Brazil officially announced Vietnam’s recognition as a "partner country" of BRICS, marking a strategic advancement in Vietnam's role in global governance and South-South collaboration.

Vietnam’s Strategic Entry Into BRICS Framework

Brazil, the 2025 rotating chair of BRICS, declared that Vietnam has been formally designated as a "partner country" within the bloc—a move that aligns with BRICS’s broader strategy to enhance global governance inclusiveness. The decision acknowledges Vietnam’s population of nearly 100 million and its dynamic economy as key assets contributing to the bloc’s evolving geopolitical and economic vision.

This recognition positions Vietnam among a select group of ten partner nations—alongside Belarus, Bolivia, Cuba, Kazakhstan, Malaysia, Nigeria, Thailand, Uganda, and Uzbekistan—under a category created at the 2024 BRICS Summit in Kazan. This tier is designed to broaden BRICS’s global outreach without necessitating full membership.

Opportunities Within The BRICS Institutional Architecture

As a partner country, Vietnam will be invited to selected BRICS meetings and initiatives, depending on unanimous consent among core members. This partnership offers Vietnam access to vital BRICS mechanisms, including the New Development Bank (NDB), which provides infrastructure financing to developing nations. Participation in the NDB could significantly support Vietnam’s infrastructure ambitions, especially in green energy, logistics, and digital transformation.

Importantly, Vietnam’s alignment with BRICS reflects shared advocacy for a fairer, more inclusive international order—an ambition Vietnam has consistently promoted in multilateral forums. This includes calls for improving capital access, equitable trade mechanisms, and greater representation for developing nations within global institutions.

Deepening Ties With BRICS Members: A Gradual Pivot

Vietnam's upgraded role is not an isolated move but part of a deliberate strategy to diversify partnerships. In 2024, Vietnam elevated its relationship with the UAE to a comprehensive partnership and welcomed Ethiopia’s Prime Minister Abiy Ahmed in April. It has also expanded trade negotiations with Egypt and sustained diplomatic dialogue with Iran—countries that recently joined BRICS as full members.

These bilateral initiatives suggest a correlation between Vietnam’s outreach efforts and the expansion trajectory of BRICS. While the bloc grows in both membership and influence, Vietnam’s deeper integration enhances its geopolitical positioning and amplifies its voice on issues vital to the Global South.

Prospects Of Full Membership: A Matter Of Consensus

Despite this momentum, Brazil has not confirmed whether there are ongoing deliberations regarding Vietnam’s elevation to full membership. BRICS decision-making rules require unanimous consent from existing members for admitting new full members. This procedural safeguard ensures alignment but also presents diplomatic hurdles.

Nonetheless, Vietnam's consistent participation in BRICS-related engagements and its parallel bilateral diplomacy with key members could pave the way for deeper integration in the future, especially if internal reforms within the bloc encourage broader inclusion.

Strategic Alignment In A Multipolar World

Vietnam’s designation as a BRICS partner marks a significant diplomatic milestone, reflecting a deliberate shift toward a multipolar engagement strategy. It reinforces Vietnam’s commitment to international equity, development cooperation, and a rules-based order that gives developing nations a more substantial role in global governance.

As BRICS continues its evolution from a loose coalition into a structured multilateral platform, Vietnam’s involvement—though still limited to partnership status—positions it as a proactive voice in shaping the agenda for equitable growth, digital transformation, and sustainable development across the Global South.

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Thomas

Central Bank

The Federal Reserve's balancing act between concerns about a weakening labor market and still above-target inflation will take center stage for investors in the coming week as they weigh risks to the rally in the U.S. stock market.

The S&P 500has rebounded sharply over the past two months as worries about the impact of trade barriers on the economy have eased since PresidentDonald Trump's "Liberation Day" announcement on April 2 sent the market plunging.

The rally hit a stumbling block on Friday as stocks fell globally and investors moved to safe-haven assets after Israel launched a military strike on Iran.

The Fed's two-day monetary policy meeting could present the next major obstacle for markets. While the U.S. central bank is widely expected to hold interest rates steady when it announces its decision on Wednesday, investors are eager for any hints about whether the Fed might be poised to lower rates in the coming months.

The fed funds rate has been at 4.25%-4.50% since the central bank last eased in December, by a quarter percentage point.

"What the Fed is going to have to try to do next week is encourage the belief that they are able to act without actually promising anything," said Drew Matus, chief market strategist at MetLife Investment Management. "If they move rates lower too early before there is evidence that there is weakening in the economy that they can then point to, they raise the risk of actually boosting inflation expectations further."

At its last meeting in May, the central bank said risks of both higher inflation and unemployment had risen. The Fed has a dual mandate to maintain full employment and price stability, and investors will be seeking any signs of whether officials are more concerned about one of those goals and what that means for the path of rates.

One area of focus on Wednesday will be an update to Fed officials' projections about monetary policy and the economy, which were last published in March.

Larry Werther, chief U.S. economist of Daiwa Capital Markets America, will be watching estimates for unemployment. While the Fed officials' last projection was for unemployment to end 2025 at 4.4%, Werther is projecting a year-end rate of 4.6%, saying recent data including jobless claims has indicated softening in the labor market.

"If the unemployment rate is expected to move higher, just aligning with what we've seen in the labor market, and inflation isn't expected to move much beyond what the Fed is projecting, then it opens the door to further easing in support of the labor market later this year," Werther said.

Fed funds futures indicate markets expect two rate cuts by the end of this year, with the next one likely in September, according to LSEG data. Such bets were bolstered by benign inflation reports this week.

Investors are also focused on Trump's selection to succeed Fed Chair Jerome Powell, with the president regularly urging the central bank to lower rates. Trump earlier this month said a decision on the next chair would be coming soon, although he said on Thursday that he would not fire Powell, whose term ends in May 2026.

The release of monthly retail sales on Tuesday will also be in focus. Investors want to see if tariffs are leading to higher prices that pressure consumer spending.

Trade developments are likely to continue to keep markets on edge, with a 90-day pause on a wide array of Trump'stariffsset to end on July 8. A trade truce this week between China and the United States offered hope that the two countries can reach a lasting resolution, but the absence of detailed terms left room for potential future conflict.

The S&P 500is up about 2% so far this year. But the index has rallied 20% since its low for the year on April 8, and is just over 2% off its record high set in February. It was down 0.8% in Friday morning trade.

"The market has rallied so hard, so fast," said Marta Norton, chief investment strategist at retirement and wealth services provider Empower. "There is vulnerability to anything that doesn't support that kind of benign narrative that has been established."

Source: TradingView

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Devin

Political

US President Donald Trump urged Iran to accept a nuclear deal to avoid further attacks, hours after Israel bombed the Islamic Republic’s atomic facilities and killed some of its top commanders.

“There is still time to make this slaughter, with the next already planned attacks being even more brutal, come to an end,” Trump said on Truth Social. Tehran must make a deal “before it is too late,” he said.

Israel said it struck around 100 targets across Iranian cities on Friday morning, using 200 planes. The attacks, which Israel has said will likely continue over the coming days, caused oil to surge as much as 13 percent, though it later pared its gains, and investors to buy havens such as gold and US Treasuries.

Iran quickly responded by sending a wave of drones toward Israel, though it was unclear if they caused any damage. Some were intercepted over Jordan.

Still, Israel expects Iran to retaliate with more drone strikes and also by firing ballistic missiles, according to a military official speaking on condition of anonymity.

Explosions were heard across Tehran, Natanz - home to a key atomic site - and other cities, according to local and social media. Israeli Prime Minister Benjamin Netanyahu said Israel “struck at the heart of Iran’s nuclear-enrichment program.”

The head of the Islamic Revolutionary Guard Corps, Hossein Salami, and the military’s chief of staff, Mohammad Bagheri, were both killed, according to Iranian media. At least two other senior IRGC members also died.

The United Nations’ atomic watchdog said there were no indications of increased radiation levels at Iran’s main uranium-enrichment site of Natanz, an early sign the strikes haven’t penetrated the layers of steel and concrete protecting the Islamic Republic’s nuclear stockpile.

Still, Netanyahu said the strikes “will continue for as many days as it takes to remove this threat.”

Iranian media said at least 95 people were wounded and that several residential buildings in the capital’s suburbs were hit. Iran hasn’t yet released an official death toll.

Netanyahu said the opening strikes were “very successful,” adding that Israelis would need to prepare for a retaliation and prepare to spend long periods in shelters.

Iran’s Supreme Leader Ayatollah Ali Khamenei said Israel will “pay a very heavy price” and should “expect a severe response from Iran’s armed forces.”

While Trump said he knew about Israel’s operations in advance, it’s unclear if he had much notice. As recently as Thursday he’d suggested he was against strikes, saying his administration remained “committed to a Diplomatic Resolution to the Iran Nuclear Issue!”

“Iran cannot have a nuclear bomb and we are hoping to get back to the negotiating table,” Trump said to Fox News on Friday.

The US was “not involved” in Israel’s strikes, Secretary of State Marco Rubio said. Rubio warned Iran against targeting US interests or personnel in retaliation.

The US and Iran were meant to meet for their next round of nuclear talks on Sunday in Oman. It’s unclear if those negotiations will still happen. Oman’s government - in the first comments from a Gulf state - said Israel’s actions were reckless and would undermine regional security.

Other Arab states echoed those comments, including Saudi Arabia, the United Arab Emirates and Qatar.

The UK’s Prime Minister Keir Starmer urged “all parties to step back and reduce tensions urgently” and said “escalation serves no one in the region.”

Regional Crisis

The attacks on Iran risk plunging the Middle East - which has been mired in various conflicts since militant group Hamas attacked Israel from Gaza in October 2023 - even deeper into crisis and hitting the global economy.

“Risks are high this will escalate into a broader regional conflict,” say Bloomberg Economics analysts including Jennifer Welch, Adam Farrar and Tom Orlik. The clearest hit to the global economy will come via higher energy prices, they said.

Iran said its oil refineries and storage tanks weren’t damaged. Still, Brent crude was up by 8.3 percent to $75 a barrel as of 10:41 a.m. in London.

“Israel’s alarming decision to launch airstrikes on Iran is a reckless escalation that risks igniting regional violence,” Senator Jack Reed, the top Democrat on the Senate Armed Services Committee, said in a statement. He said Trump and other nations need to push for “diplomatic de-escalation before this crisis spirals further out of control.”

Republican politicians refrained from criticizing Israel and largely said the country was provoked by Iran.

Israeli Defense Minister Israel Katz said it was a “preemptive strike,” with the country’s officials saying they had evidence Iran was planning an attack.

Tehran has repeatedly insisted that its atomic activities are for peaceful, civilian purposes only. But it has significantly expanded uranium enrichment since 2019 - a response to Trump’s withdrawal the year before from a 2015 nuclear deal signed under Barack Obama’s administration.

Efforts by Trump to forge a new deal since he returned to power in January have made stuttering progress. The two sides have struggled to bridge their main dispute. The US - along with Israel - argues that Iran mustn’t be allowed to enrich uranium, while Tehran had said it must retain that right. The Islamic Republic says it needs to process uranium, at least to a low level, for civilian purposes such as fueling nuclear power plants.

Iran had ratcheted up tensions on Thursday, when officials announced they would inaugurate a new uranium-enrichment facility. That was after the International Atomic Energy Agency - the United Nations’ atomic watchdog - said Iran wasn’t complying with its international obligations. The IAEA’s move set Iran up for a potential renewal of widespread UN sanctions.

Shortly before, the US ordered some staff to leave its embassy in Baghdad, the capital of Iraq, which neighbors Iran. CBS News reported that was partly down to the US being told Israel was closer to striking Iran.

Tensions between Iran and Israel have soared since Hamas, a Palestinian militant group backed by Tehran, attacked the Jewish state on Oct. 7, 2023.

The two countries engaged in unprecedented, direct missile and drone attacks on each other in April and October last year. Each time, Israel responded to Iranian strikes - most of which were intercepted - with some of its own.

Israel, however, refrained for hitting Iran’s nuclear facilities, instead concentrating on military targets such as air-defense systems and missile-making factories.

This is the first time Israel has decided to go after Iran’s atomic facilities, which it views as an existential threat, with airstikes.

Source: Rigzone

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Gerik

Economic

Commodity

Critical Raw Materials as a New Flashpoint in US-China Trade

Beginning in April 2025, China ramped up export controls on several key industrial minerals essential for semiconductor and AI hardware production. This move coincides with rising trade tensions with the United States, as both nations maneuver for dominance in strategic technology supply chains. Industry insiders report that inventories of critical materials—especially low-temperature solder paste, which uses bismuth—are rapidly depleting.

Executives from suppliers serving Nvidia, Amazon Web Services, and Google told Nikkei Asia that they are operating with less than two months' worth of solder stock. Although China has not enacted a full export ban, its prolonged licensing and customs procedures have effectively slowed supply, causing bottlenecks in AI server manufacturing.

The Role of Low-Temperature Solder in AI Infrastructure

Low-temperature solder is essential for mounting components on printed circuit boards and attaching heat dissipation modules—both crucial in assembling high-performance computing hardware. This solder primarily consists of a tin-bismuth alloy, with bismuth being a mineral under China’s tight export scrutiny. The high melting point efficiency and low toxicity of bismuth make it ideal for thermal management in data centers.

As one executive remarked, “We’re down to six weeks of critical solder materials. If talks between Washington and Beijing don’t produce real outcomes, we’ll be forced to either pause production or adopt more expensive, less reliable alternatives.” The urgency of the situation has grown as executives increasingly view mineral access as a geopolitical risk rather than a procurement issue.

Limited Substitution Options Drive Costs Higher

Efforts to find alternative materials have thus far proven both technically and economically problematic. One supplier noted that bismuth-free substitutes are not only more expensive but often lack the thermal efficiency required for AI server environments. Bitmut-based solders, prized for their compatibility with heat-sensitive components, are difficult to replace without compromising device performance.

According to the European Union, China currently produces around 69% of the global bismuth supply. The scarcity outside of China has pushed global prices up 460% since the start of 2025, reaching $35 per pound. Leading manufacturers such as Shenmao Technology are scrambling to source from other regions, including Mexico and Vietnam, to prevent complete production halts.

China’s Pattern of Mineral Weaponization

This latest development is consistent with China's broader pattern of mineral export controls. In late 2024, Beijing imposed stricter regulations on several dual-use metals including tungsten, graphite, and magnesium. Since then, customs scrutiny has intensified for exports of restricted materials such as rare earths and solder pastes, disrupting regular flows of supply and prompting global concerns over resource access.

Neodymium—a rare earth crucial to permanent magnets used in electric motors, speakers, and robotics—has also been affected by the latest wave of restrictions. The increasing difficulty of securing these materials, combined with opaque regulatory procedures in China, is forcing global manufacturers to reassess long-standing sourcing arrangements.

Supply Chain Diversification Still Lags Behind

Although the United States has identified rare earths as a critical vulnerability since its 2021 supply chain review, tangible progress in diversifying sourcing remains slow. Pegatron, a major supplier to Apple and Tesla, reports being forced to redesign components and revise approval workflows due to rare earth shortages beginning in April 2025.

The company is actively seeking alternatives from Australia, but these efforts face technical and logistical delays. Yageo’s chairman, Pierre Chen, echoed the concern, warning that continued Chinese restrictions could significantly disrupt the global electronics supply chain. Nonetheless, he maintained that the sector is resilient and is increasingly committed to building alternative sourcing strategies.

Mineral Access as the Next Strategic Battleground

The intensifying struggle over access to critical minerals like bismuth and neodymium marks a new phase in the US-China technology rivalry. What was once a domain of trade policy and tariffs has now expanded into raw material security—where access, not just cost, determines competitiveness.

As supply shortages ripple through AI hardware production and semiconductor supply chains, both industry and governments are being forced to respond with greater urgency. Whether through diversification, stockpiling, or diplomatic negotiations, the next phase of strategic competition will be defined not just by who controls technology, but by who controls the ground it comes from.

Source: Nikkei Asia

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Gerik

Economic

Middle East Situation

Middle East Conflict Fuels Volatility In Global Oil Markets

Oil prices soared amid fears that the Israel-Iran conflict could disrupt supplies from the Middle East—a region responsible for roughly one-third of global crude output. Brent crude surged 12% while WTI jumped 13.5% for the week, marking the largest weekly gains since Russia’s invasion of Ukraine in 2022.

The potential for Iran to retaliate against Israel by targeting vital transport routes such as the Strait of Hormuz, which handles about 20% of daily global oil flows, drove investor speculation. Although actual supply remained unaffected during the week, the mere risk was enough to push volatility to levels unseen since early 2022, reflecting a strong correlation between geopolitical instability and energy market pricing.

Safe-Haven Demand Sends Gold Prices Near Record Highs

In tandem with oil, gold rose sharply as investors fled to safe-haven assets. The precious metal gained 1.4% in the final session of the week and ended 3.5% higher overall, approaching its record level of $3,500 per ounce.

The price spike underscores investors’ intensified efforts to preserve capital in uncertain times. Gold, often viewed as a store of value during crises, once again affirmed its defensive role as the Israel-Iran conflict sparked fears of broader escalation. The robust influx of funds into gold markets suggests investor sentiment is closely tied to geopolitical developments, with heightened alertness to potential escalations.

Equity Markets Falter Amid Rising Risk Aversion

Global equity indices swung wildly as the week progressed. Early optimism, fueled by easing US inflation and hopes of positive US-China trade dialogue, gave way to deep losses following news of Israeli strikes on Iran.

On June 13, the Dow Jones dropped 1.8%, the S&P 500 lost 1.1%, and the Nasdaq fell 1.3%. European markets mirrored the decline, with the Stoxx 600 down 0.9%, while Asian indices like Japan’s Nikkei, South Korea’s Kospi, and Hong Kong’s Hang Seng each fell by over 1%. For the week, all major US indices closed lower, with the Dow shedding 1.3%, S&P 500 dropping 0.5%, and Nasdaq down 0.6%.

While short-term sentiment appeared shaken, some long-term investors considered the sell-off a buying opportunity, anticipating that the geopolitical crisis may remain contained. Wells Fargo strategist Sameer Samana noted that conflict-driven corrections can present entry points, particularly for commodity-linked assets and undervalued equities.

Currency Markets Reflect Flight To Safety But With Divergent Signals

Currency markets also reflected the risk-off environment. The US dollar and Swiss franc appreciated as investors sought safe storage for capital, with the USD Index climbing 0.5% to 98.16. The Swiss franc reached a near two-month high before closing modestly higher.

Contrarily, the Japanese yen—historically another safe-haven asset—struggled to maintain early gains. Although the yen rose initially on conflict news, widening yield differentials with US treasuries caused the USD/JPY to rise, ending the week with the yen down 0.34% to 144 JPY/USD. Similarly, the euro slipped 0.3% against the dollar to end at 1.15 USD/EUR, despite having touched its highest level since October 2021 earlier in the week.

This divergence indicates that while geopolitical risk temporarily overrides macro fundamentals, interest rate differentials remain a powerful force in FX markets. As noted by Arun Bharath from Bel Air Investment Fund, unless conflict intensifies, the dollar may resume its weakening trajectory, but extended war could reinforce its strength through a so-called "geopolitical premium."

Uncertainty Undermines Asset Stability And Highlights Global Risk

This week’s market behavior illustrates the widespread effects of geopolitical flashpoints. While some reactions—particularly in equities and commodities—may prove short-lived, the broader implication is that geopolitical uncertainty now ranks among the most immediate risks facing investors globally.

The potential for additional shocks remains high. A prolonged or expanded Middle East conflict could undermine asset stability, fragment trade routes, and elevate inflationary pressure via commodity markets. Meanwhile, if tensions recede, investor focus is likely to return to fundamentals such as economic growth and monetary policy.

Looking ahead, market participants will closely monitor the upcoming G7 summit in Canada and key interest rate decisions from the US Federal Reserve, Bank of Japan, and Bank of England. These events will further influence investor expectations and determine whether volatility remains elevated or subsides in the weeks to come.

In summary, the Israel-Iran conflict has once again underscored the global market’s vulnerability to political shocks, revealing how fragile investor confidence can be when hard security risks intersect with economic systems.

Source: Business Insider

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Gerik

Economic

China–U.S. Trade War

Sharp Decline In Bilateral Trade Reveals Underlying Realignment

Recent data from Trade Data Monitor indicates a dramatic contraction in trade between the US and China. In May, Chinese exports to the US fell by 34.4% year-over-year to $28.8 billion—the sharpest monthly decline since February 2020. Imports from the US also dropped 17.9% to $10.8 billion. Although both sides had previously reached a framework agreement to de-escalate trade tensions, the figures suggest a longer-term divergence that such agreements alone cannot reverse.

Economist John Miller emphasized that this downturn points to a structural transformation in global trade. He likened the current moment to the post-2001 boom following China’s WTO accession, only now in reverse. Chinese firms, responding to shrinking US demand, are increasingly forced to either relocate production or identify alternative markets.

Redirection Toward ASEAN And Emerging Partners

China’s export pivot is most evident in its trade expansion with ASEAN countries. In May, Chinese exports to ASEAN rose 15.2% to $58.4 billion. Exports to Vietnam alone surged 22.2% to $17.3 billion, with Thailand and Singapore also seeing significant increases of 21.8% and 12.8% respectively. This shift reflects a reconfiguration of China's trade network, aligning with regions less encumbered by geopolitical tensions and tariff risks.

The correlation between declining exports to the US and growing engagement with ASEAN partners suggests a redirection strategy aimed at maintaining export volumes. However, this change also signals the decoupling of the two largest global economies, with potential ripple effects for trade efficiency and investment flows.

Agricultural Trade As A Strategic Lever

China’s behavior in soybean procurement underscores a tactical approach to trade leverage. Although China imported a record 13.9 million tons of soybeans in May—worth $6.1 billion—it notably reduced purchases from the US, shifting toward Brazil. Imports from Brazil increased by 9.6%, reaching $11.3 billion. This adjustment, while influenced by price and harvest cycles, also aligns with broader trade realignment strategies, as noted by John Miller.

The correlation between political dynamics and procurement decisions, particularly in agriculture, indicates the strategic deployment of commodity sourcing to minimize dependency on geopolitical rivals. Chinese negotiators, aware of their bargaining position, appear to be reducing reliance on US agricultural goods to fortify their long-term trade autonomy.

Global Supply Chains Under Pressure From Fragmentation

The ongoing fragmentation of US-China trade ties poses significant challenges to global production networks. Rajiv Biswas of S&P Global notes that the separation of the two largest economies is compelling multinational firms to reassess manufacturing locations and capital allocation strategies. This reconfiguration is not merely geographic but also financial, potentially triggering a redirection of FDI flows toward countries aligned with the “China +1” diversification model.

Such restructuring is expected to raise costs and reduce supply chain efficiencies in the medium term. The extent of these inefficiencies may vary, but the shift suggests an underlying trend of supply chain regionalization and risk mitigation—both symptoms of the widening trade fissure.

Short-Term Gains And Long-Term Risks For ASEAN

For ASEAN economies, especially Vietnam and Thailand, the redirection of Chinese exports provides short-term trade benefits. The increase in imports from China supports domestic production and positions these nations as secondary hubs in a restructured supply network. However, this opportunity is shadowed by potential volatility, should trade frictions escalate further.

The sustainability of such gains depends on the stability of global consumption markets and the resilience of ASEAN economies in navigating policy shifts and protectionist responses from major trading partners. The long-term risk lies in excessive exposure to geopolitical turbulence and overreliance on redirected Chinese supply chains.

Global Growth At Stake Amid Trade Nationalism

The broader macroeconomic implication of this trade deterioration is a likely drag on global growth. The International Monetary Fund has warned that increasing global economic fragmentation could reduce world GDP by as much as 7% over the long term—comparable to the entire economy of Germany. If protectionist impulses continue to replace multilateral cooperation, global targets for sustainable recovery and green growth will become increasingly difficult to realize.

Ultimately, the structural divergence in US-China trade relations reflects not just a bilateral issue, but a transformation with global reach—reshaping investment patterns, consumption flows, and policy priorities for the coming decade.

Source: Nikkei Asia

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Thomas

Economic

UK Prime Minister Keir Starmer said there were no “hiccups or obstacles” remaining in the way of finalizing a trade deal with the US and indicated that an agreement would likely come soon.

“I’m hoping that we will complete it pretty soon,” Starmer said in an interview with Bloomberg News on Friday, referring to the deal. “There’s nothing unexpected in the implementation, and so we haven’t got any hiccups or obstacles.”

Starmer’s government is trying to hammer out the final details of its trade deal with the US, whose broad outlines were first agreed to in May in a move to head off President Donald Trump’s more punitive tariffs. While the UK was the first country to have reached such a deal with the Trump administration, but left the finer points to future negotiations.

Under the initial terms announced last month, the US said it intended to cut its tariff on cars imported from the UK from 27.5% to 10% for the first 100,000 vehicles each year and to slash levies on UK steel from the current 25% to zero. In return, the UK vowed to increase the quota of beef and ethanol that the US can export to the country tariff-free.

Pushing the deal over the line would be seen as a win for Starmer, who was elected last July on a promise to boost economic growth in the UK. That has so far proved elusive and his popularity has slumped during his 11 months in office. But agreeing a deal before any other country would help to give UK manufacturers a competitive edge.

Car manufacturers would especially welcome the reduction of US tariffs after warning that Trump’s levy could wreak havoc on the sector and risk thousands of jobs. Starmer said the initial terms of the trade deal laid out in May were “a huge relief to car manufacturing, those working in the sector,” adding that there were “jobs protected, jobs created by this deal.”

Securing agreement on the entire deal would also bring relief to the UK’s beleaguered steel sector. The UK is currently the only country to avoid the 50% tariff on steel that Trump announced last month, but that higher rate could still be imposed if a deal is not reached. British companies have already reported US orders drying up under the 25% rate.

A deal could depend on Downing Street easing US concerns over the Chinese ownership of British Steel. Jingye Group still holds the plant even though the UK government took over operational control earlier this year.